Failure to have appropriate processes to properly check affordability has left sub-prime firm Amigo Loans publicly censured by the Financial Conduct Authority.

The FCA said it would have imposed a £72.9 million fine on the concumer credit firm for the failings which occurred between 2018 and 2020, leading to "a high risk of consumer harm both to borrowers and guarantors".

However it accepted that Amigo had demonstrated such a fine would cause the firm serious financial hardship; it already has a scheme of arrangement aimed to ensure an amount of redress is paid to affected customers, with the FCA's approval.

Amigo provides sub-prime loans to consumers with difficult circumstances or credit history, who are then required to have a family member of friend to act as guarantor, committed to make repayments if the loan recipient is unable to make a repayment.

The FCA found that one in four of Amigo's guarantors were required to step in and make repayments at some point during the term of the loan.

Mark Steward, the FCA's executive director of enforcement and market oversight, said: “Amigo failed to assess properly the affordability of its lending, especially to vulnerable consumers, as our rules required. This led to lending that was unaffordable for some and meant guarantors had to step in.

"It also had the effect of prioritising the firm’s commercial interests over the obligation to comply with the rules and safeguard customers from unaffordable loans."

The FCA found Amigo's processes for affordability checks were inadequate, reviews which identified weaknesses weren't acted upon sufficiently, and it had failed to maintain adequate records of its historic business processes.

"As a result, on repeated occasions during the investigation, it was unable to provide adequate responses to questions.

"It also negligently deleted the email accounts of former staff members which hampered the FCA’s investigation," said the FCA.

In November, automotive fintech firm iVendi advised motor retailers that single point dealer processes that track motor finance activity could prove essential to meeting the Financial Conduct Authority's (FCAs) Consumer Duty principle, which comes into effect on July 31 this year,

James Tew, chief executive at iVendi, said that the ability to record, review and audit all aspects of the consumer journey in a centralised place would prove an important part of the new responsibility to “put customer needs first”.

His comments followed the FCA's assertion that the finance sector needs “a higher quality of credit information” about consumers to ensure that consumers get accurate lending advice,